Juhana Peltonen's bloghttp://www.softwareindustrysurvey.org/blog/3
enOur 2013 survey is now up and runninghttp://www.softwareindustrysurvey.org/node/74
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>The 2013 survey is now underway, and invitations to participate are being sent using traditional mail and email. Last year's survey turned out to be a great success both in terms of impact and participation. In the spring and summer of 2012 our survey was the first to examine the migration of former Nokia employees, and thanks to the many responses, we were able to contribute valuable information to this very important discussion.</p>
<p>The impact of Nokia's strategy change after "burning platform" is virtually outside public discussion at the moment, as interest has turned toward success cases in the gaming industry. The turbulence in the Finnish ICT sector still remains, and not all of it is positive. Beneath the public discussion, many of the layoffs announced by Nokia a year or more ago have been taking effect during the past year. Also, Nokia's Bridge funding for new startups is running low, which could mean that several Nokia spinoffs<a href="http://www.softwareindustrysurvey.org/sites/default/files/Survey2013%20screenshot_0.png"> may need to close down in autumn 2013</a>. </p>
<p>Taken together, there is still an order of magnitude difference in the recruiting needs of gaming companies and the amount of former Nokia employees seeking work. Nobody really knows for certain how the job market dynamic will develop over time, but we believe it is important to provide a snapshot of the situation from the company-level perspective.</p>
<p>This year we are asking software companies some more details about how they have hired former Nokia employees, and especially when. We hope to create a "map" of how things have developed, and look for possible signs of saturation and pull in different areas of the industry. We are also mapping companies started by former Nokia employees. We can then use this data to compare these firms with other startups.</p>
<p>Apart from Nokia's situation, this year we are visiting themes from the <a href="http://softwareindustrysurvey.biz/sites/default/files/Growth_Forum_report_2008.pdf"><br />
2008 Growth Forum</a>. In 2008 the world was very different compared to now. For example, top-tier US VC was quite rare in Finland, and app stores had not reached the adoption rates they have today, which have helped Finnish game companies catapult to the global scene.</p>
<p>Also the student-driven entrepreneurship movement was only taking its baby steps, and generally there was less talk about high technology entrepreneurship altogether. Also quite importantly, the world economy was just entering the Financial Crisis that is still broadly hindering growth almost five years later.</p>
<p>But how has the entire software industry changed? What do firms consider to be the limitations of growth now? How do companies internationalize? What are the areas of funding that are not currently being addressed? These are important questions that warrant a thorough investigation, as excessive generalized opinions in one direction or the other are quite common.</p>
<p>Our survey will be open for about a month, and we will publish our results around mid-June. Our team of 1.5 people in Aalto will start to analyze the data once about 25% of the responses are in by using reusable analysis scripts. This enables us to minimize the time between closing the survey and publishing the results. This year we will also receive support from the University of Jyväskylä, who have designed questions regarding cloud software and will help us in their analysis.</p>
<p>We will update this site as the survey progresses. Like last year, we will probably post some tentative results along the way. </p>
<p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Kasvufoorumi_logo_small.jpg" /></p>
</div></div></div>Wed, 08 May 2013 10:56:33 +0000Juhana Peltonen74 at http://www.softwareindustrysurvey.org/adminhttp://www.softwareindustrysurvey.org/node/74#commentsRevisiting mobile platforms with a German flavorhttp://www.softwareindustrysurvey.org/node/70
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>In my <a href="http://softwareindustrysurvey.fi/node/68.html">latest post</a> I examined how Finnish software companies have been adopting Windows Phone as a development platform. Our preliminary data (130 responses) pointed out that quite well: Some 9% of Finnish software SMEs reported "significant" development using the platform in 2010 moving it into striking distance from Android. </p>
<p>When looking at plans for 2013, Windows Phone seems to be going even stronger, and it might even overtake Android. Of course, these numbers do not count actual development hours, but still tell that Windows Phone is being taken quite seriously at least in the Finnish developer community.</p>
<p>However, we were left puzzled about the scale of the phenomenon. Was there just a general WP “buzz” among Finnish companies that caused them tick the future-facing WP box in our questionnaire without having any concrete projects in mind? Or perhaps Finnish companies are seeing market opportunities within Finland due to Nokia's new strategy?</p>
<p>Our recently launched <a href="http://softwareindustrysurvey.de/">German sister study</a> gives a bit of a roader perspective onto the topic. Similar to our study, it targets firms based on their industry classification. However, <a href="http://softwareindustrysurvey.de/en/node/42">their findings</a> of WP development also show that the platform is doing quite strong among firms that develop mobile software. To further compare the German situation to the most recent Finnish data (now with 341 responses), I drew the following graph. </p>
<p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Platforms_mobile_DE_all.png" /></p>
<p>It turns out that the Germans were developing for WP just as often as the Finnish firms<sup>1</sup>. As a disclaimer, the responding German firms were larger than the Finnish respondents (median revenue 500k€ vs. 285k€), and considered themselves to be software product firms more often (50% vs. 35%)<sup>2</sup>. Size however does not seem to shake the platform distribution much, but firm type does: Software development service firms are more likely to be interested in WP than software product firms. This means that Finnish development service firms are probably more keen on WP , as illustrated in the following image<sup>3</sup></p>
<p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Platforms_mobile_DE_serv.png" /></p>
<p> Looking at future plans, WP seems to be also much on the German companies minds as well, with about 30% of both Finnish and German firms planning significant software development (with service firms, the national differences even out). Conclusion: Planning future WP development in high numbers is not just a strange phenomenon in Nokialand.</p>
<p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Platforms_mobile_future_DE_all.png" /></p>
<p>Notes:<br /><sup>1</sup>The difference is not statistically significant.<br /><sup>2</sup>These differences are mostly a result of differences in the studies.<br /><sup>3</sup>The difference between Finland and Germany is not statistically significant probably due to the low number of observations in the ongoing survey.</p>
</div></div></div>Fri, 25 May 2012 18:07:24 +0000Juhana Peltonen70 at http://www.softwareindustrysurvey.org/adminhttp://www.softwareindustrysurvey.org/node/70#commentsIs Windows Phone Development a Passing Trend?http://www.softwareindustrysurvey.org/node/68
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>The success of any software platform rests upon available apps, and if Windows Phone (WP) wants to establish itself as a part of the “third ecosystem”, it needs to close its app gap compared to iOS and Android. If we look at the interest of software developers toward WP, things are looking quite positive: <a href="http://www.appcelerator.com/form/forms/www/survey-2012-q1-download">The quarterly Appcelerator / IDC Mobile Developer Report</a> -one of the best known surveys on developer interest- suggests that WP has reached third place in the hearts of software developers, while iOS (iPhone and iPad) enjoys a persistent lead followed by the slightly fading Android. While the respondents are clearly not random developers, they represent both US and European perspectives. </p>
<h2>Meanwhile in Finland</h2>
<p>In the last year’s <a href="http://softwareindustrysurvey.fi/ReportFinland2011.pdf">survey</a> we found that Windows Phone (WP) development in Finnish software SMEs would explode by 500% the end of 2012 – at least if we take companies’ plans to “significantly develop” for the platform seriously. Taken, the reference point was low in 2010 (4% of firms), but on the other hand, the projected 2012 level (24%) was the same as for Android, a mature and leading platform. Can these results be nothing more than an expectation bubble?</p>
<p>Our first explanation for the results was a disproportionate knee-jerk reaction to Nokia’s move to dump Symbian and focus on Windows Phone. However, when we compared Windows Phone numbers to the firms that developed for Symbian in 2011, it seemed unlikely that the popularity of Windows Phone was only about jumping off a burning platform. In fact, we found that 76% of firms that developed software for desktop Windows in 2010 (about half of the respondents) had plans for Windows Phone in 2012. Taken together, the popularity of Windows Phone seemed to be driven by the industry’s overall shift toward mobile platforms, synergies between MS desktop and mobile development, and a Nokia-driven Finland effect, which is more about perceived opportunity than unavoidable necessity.</p>
<h2>Is there a bubble?</h2>
<p>Looking at our preliminary 2012 data (130 responses out of an expected 500), is there any sign of the Windows Phone euphoria fading? The following figure looks at how realized platform adoption for development purposes changed when comparing companies in 2010 and 2011. As Mikko wrote in his previous <a href="http://softwareindustrysurvey.fi/node/67.html">blog</a>, the share of companies developing for Windows Phone has more than doubled (from 4.1% to 8.5%) making it the clear number 3 behind Android and iOS – in line with the Appcelerator developer interest survey. This indicates robust growth for the platform, but similar growth can also be seen for Android and iPad applications. Only iOS development for the iPhone shows signs of leveling out, and the margin compared WP is narrow. Slightly surprisingly, Symbian and Meego are still hovering at 2010 levels. We believe that this is largely due to maintenance of existing software (in the last figure, they are expected to collapse). </p>
<p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Platforms_mobile.png" width="100%" /></p>
<p>But can we expect that almost quarter of Finnish Software companies will have significant development for WP by the end of 2012, as our 2010 survey indicated? Looking back at the outcomes of 2011, this would require a three-fold increase within a year and having twice as many firms developing for WP than Android had in 2011 – the platform with the largest installed base in the world. So is there a WP expectation bubble in the Finnish Software Industry? – Our answer is a clear “yes”: there is simply no way that Nokia would create a pull that would offset the competitive situation between mobile platforms – even considering that supply leads demand in new platforms.</p>
<h2>A bubble - so what?</h2>
<p>Provided that expectations are probably overshot, does this make WP an insignificant development platform? Should companies start to scrap plans for adopting it? To provide a different perspective, let us consider the revenue forecasts of software firms: even though our surveys show that companies systematically and significantly overshoot their revenue forecasts one year after the other, the Finnish software industry has still been growing at a faster pace than the overall economy. Hence, while the industry is stuck in a perpetual bubble, its growth is still far from insignificant. (It is even likely that the same holds for all entrepreneurial activity irrespective of industry.) What we perhaps should be looking at is changes in expectations, regardless if the expectations are realistic or not.</p>
<p>To do this, the following figure presents plans to develop software for different mobile platforms - The 2012 plans were surveyed in 2011, and the 2013 numbers are fresh from this month. These numbers point out that WP development plans are going even further up from 2010. Looking at the stagnating iOS numbers, WP is strongly headed for second place. And even if its adoption rate falls short of expectations, it has already reached a position near Android and iOS – far from insignificant.</p>
<p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Platforms_mobile_future.png" width="100%" /></p>
</div></div></div>Mon, 14 May 2012 15:04:59 +0000Juhana Peltonen68 at http://www.softwareindustrysurvey.org/adminhttp://www.softwareindustrysurvey.org/node/68#commentsWho will hire former Nokia employees: Will the demand meet the supply? http://www.softwareindustrysurvey.org/node/59
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even">
<div>
<p>This blog post probes deeper into the Finnish software sector’s ability to employ the people whose jobs Nokia and its subcontractors will be shedding in the near future. Though Nokia has guaranteed the continuation of work until the end of 2011, many employees particularly from its software suppliers will be on the market much before this time is up. The question then becomes, where will these engineers and managers be headed?</p>
<p>Current numbers put the recently announced direct net (non-outsourced) job cuts of Nokia at about 1,400 in Finland whereas the ripple-down effects on its Finnish subcontractors has been estimated to be around 2,000 jobs. Considering the Nokia-dominance of ICT sector in the country, this is indeed a very significant industry restructuring. On the other hand, having a software SME sector that has been craving for more labor for quite some time creates a very interesting polarity. Hence, will the needs of the SME sector match the skills coming to the market, or in other words, will the demand meet the supply?</p>
<p><strong><strong>The absorbing role of the Finnish software SMEs</strong></strong></p>
<p>The largest software firms in Finland are predominantly service firms, many of which serve Nokia. The net decrease will mostly take part in these firms, though the Finnish branch of Accenture will grab many Symbian developers as part of Nokia's outsourcing deal. Other large multinationals are also moving in to grab their share of the workforce entering the market. For instance Intel has announced it will set up a 200 person Meego development site in Tampere.</p>
<p>Looking beyond large firms, what about Finnish software SMEs? Discussion about their chronic shortage of skilled labor is not a very recent topic. The financial crisis quieted down this talk only briefly, as software SMEs escaped the recession almost without a scratch. Now these companies are hiring on a broad scale. Therefore unsurprisingly, many now believe that this injection of engineers and managers into the job market will be like soothing rain to them.</p>
<p>According to preliminary data in our survey, 164 (53%) of 304 responding firms say that they expect to employ more people by the end of 2011 than at the beginning of the year. Out of these 164 firms, 41% say that they are likely or very likely to hire employees that are freed up from Nokia and its subcontractors. </p>
<p>What makes this 41% different from the rest of the firms that are hiring is the topic of the following analysis. By analyzing almost 200 data points per response from our latest questionnaire, a number of preliminary findings came up (p&lt;.05). </p>
<p><strong><strong>No secret master plan</strong></strong></p>
<p>One could imagine that firms that wish to grow fast through developing new products and have the resources to do so might be more interested in hiring former employees of Nokia and its subcontractors’. Or perhaps Nokia employees have sales and marketing experience in particularly international consumer markets that might be valuable to Finnish software SMEs? </p>
<p>The data show that there are no systematic relationships of this nature as there are no significant differences in growth willingness, sales, firm age, international sales (except a negative with the tiniest firms), and profitability between firms that are interested in hiring ex-Nokians. This does not rule out that some companies are taking this approach, but there does not seem to be any noticeable trend. </p>
<p>However, these firms more often report that a lack of qualified personnel is limiting their growth. This suggests that the willingness to hire ex-Nokians is mainly driven by the need to patch up certain competence areas. Firms that sell development projects faintly seem more interested than other types of firms.</p>
<p><strong><strong>Knowing how large companies work </strong></strong></p>
<p>Apparently the process and legal experience of Nokia employees comes respected, as the small fraction of firms that plan to IPO in 5 years also were more likely to consider hiring them. Firms interested in Nokia employees generally seem more “professional” than average other company that is recruiting. They more often focus on well-profitable customer segments instead of trying to serve every customer and hack up solutions from miscellaneous components (thanks to the respondents who made it through the last page). Seeing companies seek employees that match their own culture is not surprising.</p>
<p>Also the knowledge of how a large company works seems appreciated: Companies, despite their size, are more interested in Nokia employees if the typical buyer of their offering has over 250 employees, the deal is over 10k€ or it involves customer-specific development and integration work. For smaller customers and deal sizes, the relationship is negative. This also surprisingly includes consumers though Nokia is a consumer electronics company. </p>
<p><strong><strong>In search for technical expertise</strong></strong></p>
<p>Looking at the type of technology firms are developing brings out more differences. In the 2011 questionnaire, we asked firms if they are developing software for 20 different platforms now or during next year. When these data are punched through statistical software, the following characteristics about companies with intentions to hire ex-Nokians pop through:</p>
<p>•<span> </span>Firms that develop any embedded software</p>
<p>•<span> </span>Almost every company that does or plans to do Meego development (unfortunately only 3% of respondents)</p>
<p>•<span> </span>65% of companies that develop or plan to develop on Oracle server software</p>
<p>The first two bullets are hardly surprising. The third one is probably explained by interest toward Nokia’s server side Java developers. Another explanation may be ERP experience on the manufacturing side. </p>
<p><strong><strong>Harder places to look</strong></strong></p>
<p>Nokia’s near absence from the social media scene is perhaps to blame for Facebook development companies being significantly less interested in Nokia employees. The same systematic effect comes through for companies with on-demand (Software-as-a-Service) offerings. Apparently having Java back-end experience is less valuable in this environment. Or perhaps Nokia’s UI and UX design skills are not valued due to the many difficulties the now rebranded Ovi has faced?</p>
<p>Also what stands out is that firms involved or planning iOS and Android development place no special premium on a Nokia job history despite these platforms are exploding in popularity. This begs the question that is “mobile experience” as a skill as easily transferrable as many think? Perhaps firms see equal value in recruiting young employees and mentoring them to develop for these platforms and in having more mature (and expensive) employees learn these skills? </p>
<p><strong><strong>The outcome is difficult to predict – no matter what experts say</strong></strong></p>
<p>To conclude this analysis with our preliminary data, it is fair to say that Finnish software SMEs interested in grabbing people leaving Nokia and its subcontractors have very diverse intentions. What seems common to all is that they are after specific technical competences, are more “organized”, and have general experience in serving larger companies. If these characteristics do not match, being a former Nokia employee does not make you stand out from the crowd. Indeed, there even seems to be some Nokia prejudice within the social media and on-demand scene. </p>
<p>How reality will play out is always a different story; Especially among SMEs, which compose the majority of the Finnish software industry, there is a general trend to be overly optimistic about personnel changes. As we wrote in Kauppalehti a few years back (August 20, 2009), from year to year, about 35% of software SMEs in Finland forecasted that they would increase personnel by the end of the reporting year, but in fact, their personnel count ended up staying the same or even reduced. In a very dramatic way, this means that positive intentions do not always lead to action, which could be bad news compared to the optimistic tone in the media. </p>
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</div></div></div>Sun, 22 May 2011 15:17:39 +0000Juhana Peltonen59 at http://www.softwareindustrysurvey.org/adminhttp://www.softwareindustrysurvey.org/node/59#commentsWhere do international growth intentions come from? (Part I)http://www.softwareindustrysurvey.org/node/46
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>Growth entrepreneurship is very much on policy makers' minds and everyone wants us to have more of them. Therefore the first post of this blog looks at Finnish software firms' intentions to internationalize from day one. Armed with our surveys and statistical software, we have been chasing this issue for some time now.</p>
<p>Some of the known growth factors we have examined thus far are not too complex. One of them is growth motivation; firms that simply have decided to grow also have more success in doing so. So in order to get an idea which firms will become rapidly growing international players, we just need to ask them if that is what they are trying to accomplish - simple as that.</p>
<p>To examine this issue, we asked CEOs of Finnish software firms about their agreement to the following statement: "Our firm has targeted international markets from its founding" on a five-point scale. We then plotted the questionnaire results with the ages of the companies' CEOs in the year the companies were founded. With a little leap of faith, the founding teams are probably about as old as the CEO, at least on average. This plot therefore gives an idea of the typical age of the people who decide to go into international business by starting their own company. Voilà, the image below (N=75):</p>
<p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Graph.png" width="640" height="466" /></p>
<p>The red line represents and average "do not agree or disagree" level, i.e. neutrality toward the statement. Everything above it thus means internationalization from day one was to some degree pursued. (The scale is cropped, but "2" would mean "disagree" and "4" would mean "agree.)</p>
<p>Overall, it seems that it is less common to start companies with global markets in mind than aiming to be local players. The camels back curve shows that people most likely to do so are in their early thirties. Interest drops steadily until about age 45, and then starts to surge again.</p>
<p>The local orientation of those under 30 seems worrying since the process of becoming the next Bill Gates or Mark Zuckerberg statrts at an early age. Not jumping into too heavy conclusions, the curve might be pushed more to the right by the typically old age of Finnish university graduates.</p>
<p>Therefore my two cents to the debate on the apparently low levels of growth entrepreneurship in Finland are that free university education and benefits to some extent discourage high tech entrepreneurship and lead potential serial entrepreneurs off their optimal learning curve. Since the serial entrepreneurs we are growing start off later, they will have less time to create firms and create less jobs. Even the willingness to take over the world in the Harley Davidson age would not shake this conclusion. </p>
<p>I end this post with the typical words of a researcher: "More studies on this topic are called upon."</p>
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</div></div></div>Tue, 08 Mar 2011 14:35:33 +0000Juhana Peltonen46 at http://www.softwareindustrysurvey.org/admin